Business Valuation Sample - MoneySoft, Inc.€¦ · This sample valuation report was generated...

HYPOTHETICAL VALUATION SCENARIO HIGHLIGHTS:

Purchase/Sale, 100% common shares valued.

Enterprise-level adjustment: Key Man discount.

Fair Market Value standard. Conclusion expressed as a single dollar value.

This sample valuation report was generated using MoneySoft DealSense® and the Financial Report Builder™. For more information call MoneySoft at (800) 966-7797. Note: this footer is fully customizable.

Business Valuation of Sample Plastics Company

As of December 31, 2015

Prepared for:

Board of Directors Sample Plastics Company

123 Main St. San Diego, CA 92136

Report Date:

September 25, 2016

Prepared by:

Michael Jones CPA, ABV, CVA, ASA Managing Director Sample Valuation Services, LLC 1000 Century Blvd. Los Angeles, CA 92821

The information contained herein is of a confidential nature and is intended for the exclusive use of the persons or firm for whom it was prepared. Reproduction, publication or

dissemination of all or portions hereof may not be made without prior approval from Sample Valuation Services, LLC.

This sample valuation report was generated using MoneySoft’s DealSense® and the Financial Report Builder™. For more information call MoneySoft at (800) 966-7797. Note: this footer is fully customizable.

About This Sample Valuation Report

This report is a sample of the type of comprehensive appraisal reports that you can create with MoneySoft’s DealSense® and the Financial Report Builder™.

DealSense was used to analyze a fictitious hypothetical company; make economic adjustments to the historic financial statements; determine appropriate risk rates; project earnings, cash flows and capital requirements of the company; and value the company using various approaches and methods. The Financial Report Builder was then used to automatically create and format the appraisal report as a Microsoft Word document. Any similarity to the names or information of actual companies is strictly coincidental.

You will notice comments (marked in this lighter gray text) throughout this report. These comments serve as prompts for you to provide descriptions, explanations and more information in certain sections. When you create a live report with the Financial Report Builder, these comments will not print.

This report contains the data, analysis, assumptions used in the valuation, descriptions of the valuation approaches and methods that were applied and the factors that went into the enterprise-level and shareholder-level conclusions of value.

This report is context-sensitive. The Financial Report Builder reviewed all of the data points in the DealSense program file and based upon the analyst’s selections, assembled the report with only the appropriate data along with descriptions of the methods and procedures used. This is not a cookie-cutter report.

There are many elements and capabilities of the DealSense program that were not used in the sample

report.

The hypothetical valuation of the sample company utilized only a fraction of the features and capabilities in valuation section of DealSense. Here is a list of the elements available in DealSense’s valuation module but not included in this sample report:

Items available in the valuation module of DealSense but not included in this report:

Detailed income statements, balance sheet and statements of cash flows (for historic, normalized and projections).

Trailing twelve month income statement.

Interim income statement and balance sheets.


Normalization adjustments presented on a year-by-year basis.

Tax-affecting cash flows for a pass-through entity.

Alternate calculation of Invested Capital Net Cash Flows starting from Operating Income rather than Net Income.

Ratios, common-size financials and other analysis calculated on a normalized basis for the subject company.

Integra industry comparison (historic and normalized).

Financing of capital expenditures.

Stub period projections from the interim date to the annualized year-end date.

New accounts in projections.

Income tax worksheet in the projections.

Appendix that includes projected financials and detailed projection assumptions.

Other standards of value including: Fair Value, Investment Value, Intrinsic Value, Business Evaluation, Marketability study.

Equity Net Cash Flows were used in the Income Approach. The program also provides the option to apply Net Income, EBT, EBIT, EBITDA, Invested Capital Net Cash Flows.

Benefit stream time-frame options include: average, weighted average, first projected year, trailing twelve months.

Ability to adjust price and other financial metrics for market transactions.

Valuation methods based on IBA, BIZCOMPS, Pratt’s Stats, “Other” user-defined data source, and Mergerstat.

Reconciliation of value indications for a given price multiple derived from both stock and asset transactions.

Beta information from multiple sources.

Capital Asset Pricing Model (CAPM) for determining a discount rate.

Discount rate adjustment that converts an after-tax discount rate to a pre-tax rate that is applicable to pass-through entities.

End-of-Year discounting option. Sample report uses Mid-Year discounting.

Properly discounting when 1st projected year is a “stub” period.

Terminal value based on Net Assets or a multiple of earnings in the terminal year.

Debt-free discount rate and capitalization rate.

Iterated WACC that solves for the market value of equity to use in WACC to determine discount


and cap rates, that when plugged into the respective valuation methods yields the same market value of equity.

Multiple of Discretionary Earnings valuation method for small owner/operator-type businesses.

Approach conclusions and Dbase conclusions for Done Deals.

Range of values for Enterprise or Shareholder-Level.

Many premium and discount options at enterprise and shareholder level.

Allocation of value between voting and non-voting shares.

Value per share including dilutives from convertible preferred stock and in-the-money options and warrants.

Valuation of a fractional interest based on a specific number of shares rather than a percentage.

Charts and graphs.

Copyright © 2019 MoneySoft, Inc. Use of this content is allowed when you license the software from MoneySoft.


Report Date: September 25, 2016 Board of Directors Sample Plastics Company 123 Main St. San Diego, CA 92136 RE: Sample Plastics Company Dear Board of Directors: We were engaged by the Board of Directors of Sample Plastics Company to issue a Detailed Report as defined in the Statement on Standards for Valuation Services (SSVS) of the American Institute of Certified Public Accountants. The valuation is for 100% of Sample Plastics Company's common stock as of December 31, 2015. This valuation was performed solely to assist in the matter of a contemplated sale of the business and the resulting estimate of value should not be used for any other purpose or by any other party for any purpose. This valuation engagement was conducted in accordance with the SSVS. The estimate of value that results from a valuation engagement is expressed as a conclusion of value.

If the engagement was restricted or limited in scope, describe here, such as: We were restricted or limited in the scope of our work or data available for analysis as follows: (describe restrictions or limitations). Please note that this comment will not print.

We have estimated the Fair Market Value on a controlling interest, marketable basis for 100% of Sample Plastics Company's common stock as of December 31, 2015 as described within the valuation report.

Our conclusion is $23,840,000 as summarized in the report that follows. This conclusion is subject to the Statement of Assumptions and Limiting Conditions and the Representations presented in the appendices to this report. We have no obligation to update this report or our conclusion of value for information that comes to our attention after the date of this report.

In arriving at our conclusion, we relied on a “value in use” or going-concern premise. This premise assumes that the Company is an ongoing business enterprise with management operating in a rational way with a goal of maximizing shareholder value.

COMMENT: If some premise of value other than going concern is used, modify the above paragraph accordingly. Example 1: “In arriving at this conclusion, we relied on a premise of orderly liquidation. This premise assumes that the assets of the business are disposed on a piecemeal basis with normal exposure for sale on the secondary market.” Example 2: “In arriving at this conclusion, we relied on a premise of forced liquidation. This premise assumes that the assets of the business are disposed on a piecemeal basis with less than normal exposure for sale on the secondary market.” Please note that this comment will not print.

Respectfully, _____________________________________________ (Signature) __________________________ (Date)


— Table of Contents —

*SPECIAL COMMENT*: To update the Table of Contents, click anywhere in the following table and then press the [F9] function key.

VALUATION OBJECTIVE AND SUMMARY 1

EXTERNAL SOURCES OF INFORMATION 4

INTERNAL SOURCES OF INFORMATION 4

COMPANY BACKGROUND 5 Company Identification 5 Nature and History of the Company 5 Stock Classes and Ownership 5 Management Team 6 Product and Service Information 6 Facilities and Current Operations 6 Markets, Market Share and Key Competitors 6 Key Customers and Suppliers 6 Business Risks 6 Strategy and Future Plans 6 Governmental or Regulatory Environment 6

ECONOMIC AND INDUSTRY CONDITIONS 7 General Economic Conditions and Outlook 7 Industry Conditions and Outlook 7

HISTORICAL AND NORMALIZED FINANCIAL STATEMENTS 8 Summary Historical Income Statements 8 Income Statement Adjustments 9 Normalized Historical Income Statements 10 Summary Historical Balance Sheets 10 Balance Sheet Adjustments 11 Normalized Historical Balance Sheets 12 Summary Historical Statements of Cash Flows 12 Normalized Earnings and Net Cash Flow Summary 13

Normalized Earnings 13 Normalized Equity Net Cash Flows (FCF-Equity) 13 Normalized Invested Capital Net Cash Flows (FCF-TIC) 14

ANALYSIS OF HISTORIC FINANCIAL STATEMENTS 15 Common-Size (Percentage) Financial Statements 16

RMA Industry Data, Common-Size Statement Comparison 17 Financial Ratio Analysis 18

RMA Industry Data, Ratio Comparison 20

VALUATION OF SAMPLE PLASTICS COMPANY 21 Overview of Valuation Approaches and Methods 23


Prior Sales of Company's Stock 24 Nonoperating Assets and Liabilities 24 Preferred Stock Valuation 25 Asset Approach 25

Net Asset Value 25 Liquidation Value 26

Income Approach 27 Discount & Capitalization Rate Estimates 27 Subject Company Data Used in Capitalization of Earnings and Excess Earnings Methods 28 Capitalization of Earnings Method 30 Capitalization of Excess Earnings 30 Discounted Future Earnings 32

Market Approach 36 Subject Company Data Used in Market Approach 37 Done Deals Transactions Method 40 Guideline Public Company Method 43

Equity Value Conclusions 47 Enterprise-Level Equity Value 48

APPENDIX — ASSUMPTIONS AND LIMITING CONDITIONS 50

APPENDIX — REPRESENTATIONS 53

APPENDIX — QUALIFICATIONS 54

1 This sample valuation report was generated using MoneySoft’s DealSense® and the Financial Report Builder™. For more information call

MoneySoft at (800) 966-7797. Note: this footer is fully customizable.

Valuation Objective and Summary

Assignment Objective

We were engaged by the Board of Directors of Sample Plastics Company to issue a Detailed Report as defined in the Statement on Standards for Valuation Services (SSVS) of the American Institute of Certified Public Accountants. Our objective was to estimate the Fair Market Value of 100% of Sample Plastics Company's common stock as of December 31, 2015.

Company Description

Sample Plastics Company is a C-Corporation and is organized under the laws of California. It is primarily engaged in the business of Plastic Products Manufacturing and is doing business as Sample Injection Molding.

COMMENT: Briefly expand on this description as you deem necessary. An area reserved for a more detailed company description is included in the Company Background section below. Please note that this comment will not print.

Qualifications of Appraiser

This report was prepared by Michael Jones Managing Director of Sample Valuation Services, LLC. Michael Jones holds the following professional designations and certifications: CPA, ABV, CVA, ASA.

COMMENT: Expand on the appraiser’s qualifications, if necessary. In addition, there is an appendix at the end of this report that is intended to include a more detailed resume. Please note that this comment will not print.

Purpose of Valuation

The purpose of this valuation is for the contemplates sale of the business. This report is prepared for Board of Directors of Sample Plastics Company and should not be used by others. This report is dated September 25, 2016.

COMMENT: Explain the purpose of the valuation in as much detail as necessary. Also define the person or entity that engaged you and the intended users of this valuation. Please note that this comment will not print.

Standard of Value

The standard of value used in our valuation of Sample Plastics Company is Fair Market Value. Fair Market Value is defined in IRS Revenue Ruling 59-60 as: “The price at which the property would change hands between a willing buyer and a willing seller when the former is not under any compulsion to buy and the latter is not under any compulsion to sell, both parties having reasonable knowledge of relevant facts. Court decisions frequently



state in addition that the hypothetical buyer and seller are assumed to be able, as well as willing, to trade and to be well informed about the property and concerning the market for such property.”

Premise of Value

Our conclusion relied on a “value in use” or going-concern premise. This premise assumes that the Company is an ongoing business enterprise with management operating in a rational way with a goal of maximizing shareholder value.

COMMENT: If some premise of value other than going concern is used, modify the above paragraph accordingly. Example 1: “Our conclusion relied on a premise of orderly liquidation. This premise assumes that the assets of the business are disposed on a piecemeal basis with normal exposure for sale on the secondary market.” Example 2: “Our conclusion relied on a premise of forced liquidation. This premise assumes that the assets of the business are disposed on a piecemeal basis with less than normal exposure for sale on the secondary market.” Please note that this comment will not print.

Scope of Work

Our analysis considers those facts and circumstances present at the Company at the Valuation Date. Our conclusion would most likely be different if another Valuation Date was used. There were no restrictions or limitations in the scope of our work or in the data available for analysis, and no hypothetical assumptions were used.

COMMENT: If there were restrictions or limitations in the scope of your work or the data available, or hypothetical assumptions were used, modify the last sentence as necessary. Please note that this comment will not print.

The factors we considered include the history of the business, economic outlook, financial condition of the business, earnings and dividend paying capacity, book value of the stock and the size of the block being valued, prior sales of the Company's stock, goodwill and intangible value, and the market prices for publicly traded and privately held companies in the same or similar line of business.

COMMENT: Edit the above description of factors based on the actual factors considered in your valuation. Most of the factors listed above are required to be considered under Rev. Ruling 59-60. Please note that this comment will not print.

Valuation Procedures

To arrive at our conclusion of value, we performed the following procedures:

* Identified the nature of the business and reviewed the history of the Company since its inception.

* Researched the general economic outlook and the outlook for the specific industry at the date of the valuation.

* Collected the Company's relevant historic financial statements.

* Analyzed the historic financial statements by calculating financial ratios and common-size financial statements for each historic year in order to identify trends.

* Compared the Company's financial ratios and common-size financial statements to industry guideline



data to identify any significant variances.

* Assisted management in preparing a [-or- Reviewed management's] 5 year projection of the financial statements based on management's assumptions as to the Company's future outlook.

* Analyzed Goodwill and other intangible value.

* Identified and analyzed prior sales of the Company's stock.

* Developed risk-adjusted Capitalization and Discount Rates to apply to the Company's historic and projected earnings, respectively.

* Collected and analyzed transactional data from comparable companies within the same industry.

* Adjusted historic earnings to eliminate the effects of excess and discretionary expenses, nonoperating revenues and expenses, and non-transferable revenue streams.

* In reaching the conclusion of value, we considered the Asset, Income, and Market valuation approaches and the following methods under each approach.

1. Asset Approach

Net Asset Value and Liquidation Value.

2. Income Approach

Capitalization of Earnings, Capitalization of Excess Earnings, Multiple of Discretionary Earnings and Discounted Future Earnings/Discounted Cash Flow.

3. Market Approach

Price multiples from sales of comparable business from the following data sources: BIZCOMPS, IBA Database, Done Deals, Pratt's Stats, Other Data Source [specify other data source] and FactSet Mergerstat Review. Additionally, we used the Guideline Public Company method.

* Selected the most reasonable enterprise-level equity value from the range of values established in the valuation methods

* Applied any appropriate enterprise-level discounts and/or premiums to arrive at an enterprise-level equity value.

* Allocated the conclusion of enterprise-level equity value between voting and non-voting shares based on a premium assigned to the voting shares.

* Calculated the total number of shares assuming dilution from convertible preferred stock and the in-the-money options and warrants.

* Calculated the shareholder-level value of 100% of Sample Plastics Company's common stock.

* Applied any appropriate shareholder-level discounts and/or premiums to arrive at our conclusion of value for the specific block of shares.

COMMENT: Modify the above list to reflect the actual procedures that were performed. Delete any procedures not performed and add an additional procedures not listed here. Examples of additional procedures include: conducting interviews with owners, management and other key personnel; performing on-site examinations of the Company's facilities; etc. Please note that this comment will not print.



External Sources of Information To aid us in our analysis of the Company, we consulted a number of publicly available sources of information. Numerous financial publications and databases were consulted including:

COMMENT: List all of the external source of data used in the valuation. Examples, Include RMA Annual Statement Studies, Integra Industry Reports, BIZCOMPS® database and Done Deals database. Please note that this comment will not print.

Internal Sources of Information To aid us in our analysis of the Company, we interviewed the following personnel:

COMMENT: Add names, titles, and positions of all personnel interviewed. Following that list, if the Company's facility(ies) were visited as part of this engagement, provide details of the facility visit. Finally, provide details of the financial, tax, and other information provided by the Company, although the source of financial statements may be explained later in this report. Please note that this comment will not print.



Company Background

Company Identification

Sample Plastics Company is a C-Corporation organized under the laws of California and located at 123 Main Street, San Diego, CA, 92126.

COMMENT: In addition to the linked information above, enter any additional identification information that you feel is appropriate for purposes of this report. Please note that this comment will not print.

Nature and History of the Company

Sample Plastics Company was established in 1989 and operates under the trade name of Sample Injection Molding. The following table describes the business activities in which Sample Plastics Company is engaged and lists the NAICS/SIC Codes for the industry associated with each business activity: Business Activity Description NAICS SIC Primary Business Activity Plastic Products Manufacturing 326199 3089 Secondary Business Activity Plastic Materials Wholesale 424610 5162

COMMENT: Use this section to explain the history of the company since its inception and describe the nature of the company's current activities. Please note that this comment will not print.

Stock Classes and Ownership

The following table lists the owners of Sample Plastics Company's commons stock as of the valuation date, December 31, 2015. The number of shares, equity class and other details are presented for each owner.

Number Percent Equity Active in Number Classes of Common Stock of Shares Ownership Class Business of Votes Preemptive Dividends

John Jones 6,000,000 75.00% A Yes 6,000,000 Yes 1,875,000 Jones Family Trust 1 1,000,000 12.50% B No 0 No 312,500 Jones Family Trust 2 700,000 8.75% B No 0 No 218,750 Jones Family Trust 3 300,000 3.75% B No 0 No 93,750 Total 8,000,000 100.00%

COMMENT: Describe all classes of stock including both common and preferred and discuss any special rights or restrictions associated with each class. Summarize the total number of shares authorized, issued and outstanding for each class. List each major shareholder, amount and class of stock they own, and their relationship to other major shareholders, if any. Please note that this comment will not print.



Management Team

COMMENT: Provide an overview of the background and qualifications of key personnel. Also include an overview of other staff, if applicable. Please note that this comment will not print.

Product and Service Information

COMMENT: Provide a description of the company's products and/or services. Please note that this comment will not print.

Facilities and Current Operations

COMMENT: Describe the company's facilities, capabilities, and its methods of providing products and/or services. Please note that this comment will not print.

Markets, Market Share and Key Competitors

COMMENT: Provide an overview of the market(s) in which the company competes and the market share for each and include details of key competitors. Please note that this comment will not print.

Key Customers and Suppliers

COMMENT: Provide an overview of the company's key customers and suppliers, if applicable. Please note that this comment will not print.

Business Risks

COMMENT: Provide an overview of the key business risks faced by the company. Include SWOT analysis here if used. Please note that this comment will not print.

Strategy and Future Plans

COMMENT: Describe the company's strategy and future plans. Please note that this comment will not print.

Governmental or Regulatory Environment

COMMENT: Provide an overview of the governmental or regulatory environment in which the company operates. Please note that this comment will not print.



Economic and Industry Conditions

General Economic Conditions and Outlook

COMMENT: Discuss or insert the distributed national, regional, and/or local economic conditions at the Valuation Date and their future economic outlook as applicable to the subject company. Identify all sources of information referenced in your discussion. If national, regional, and/or local conditions do not affect the subject company, explain why. Please note that this comment will not print.

Industry Conditions and Outlook

COMMENT: Discuss the economic conditions at the Valuation Date and the future economic outlook for the industry in which the subject company operates. Identify all sources of information referenced in your discussion. Please note that this comment will not print.



Historical and Normalized Financial Statements A summary of the historic Income Statements, Balance Sheet, and Cash Flows for Sample Plastics Company is presented in the following section.

COMMENT: Make a note here if f you are attaching detailed financial statements as part of this valuation.

Financial statement data is necessary in order to analyze the historic performance of the business and how that performance compares to its peers in the industry. Prior revenues, expenses and earnings provide a baseline for estimating future earnings and cash flows.

Summary Historical Income Statements

The following tables provide a summary of Sample Plastics Company's Income Statements.

FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

Net Sales Revenue 28,282,860 28,804,580 29,243,400 30,019,270 31,041,420

Total Cost of Goods Sold 18,460,679 18,496,757 18,505,336 19,010,849 19,211,797

Gross Profit 9,822,181 10,307,823 10,738,064 11,008,422 11,829,623

Total General & Administrative Expenses 3,634,140 3,700,612 3,902,651 4,294,868 4,474,389

Income From Operations 6,188,041 6,607,211 6,835,413 6,713,554 7,355,234

Total Other Revenues and Expenses (443,773) (425,150) (446,153) (513,769) (546,062)

Income Before Taxes 5,744,268 6,182,061 6,389,260 6,199,785 6,809,172

Total Income Taxes 2,240,265 2,411,004 2,491,811 2,417,916 2,655,577

Net Income 3,504,003 3,771,057 3,897,449 3,781,869 4,153,595

COMMENT: On the lines below, identify and describe any significant issues with respect to the historic income statements. Please note that this comment will not print.



Income Statement Adjustments

In order to estimate the value of Sample Plastics Company, it was necessary to make certain normalization adjustments to the Income Statements. Normalization adjustments are made to reflect the Company's true economic earnings by eliminating excessive, nonoperating, non-recurring and/or unusual items. The following table presents a summary of the adjustments that were made to Sample Plastics Company's earnings.

FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

Add/(Deduct) Income Adjustments:

Nonoperating Income (40,000) (50,000) (60,000) (70,000) (80,000)

Total Income Adjustments (40,000) (50,000) (60,000) (70,000) (80,000)

Add/(Deduct) Expense Adjustments:

Officer/Owner's Compensation (150,000) (175,000) (200,000) (225,000) (250,000)

Office Utilities (5,000) (5,000) (10,000) (15,000) (20,000)

Less: Nonoperating Expense (79,999) (82,000) (103,000) (140,000) (150,000)

Total Expense Adjustments (234,999) (262,000) (313,000) (380,000) (420,000)

Total Income & Expense Adjustments Before Tax 194,999 212,000 253,000 310,000 340,000

Less: Tax Effect 76,051 82,681 98,671 120,902 132,602

Total Adjustments Net of Tax Effect 118,948 129,319 154,329 189,098 207,398

1. Nonoperating Income and Nonoperating expenses have been eliminated as they are not transferrable and not related to the operations of the business.

2. Officer/Owner’s Compensation has been adjusted to reflect the market value of the services performed. See the Officer/Owner Compensation Adjustments worksheet for the calculation of this adjustment.

3. Office Utilities have been adjusted to eliminate the portion of the expense that are not related to the operations of the business.

4. The Tax Effect of the net adjustments has been calculated using a marginal Federal Income Tax rate of 35.79% and a State Income Tax rate of 5%.



Normalized Historical Income Statements

The normalization adjustments presented in the previous section were applied to the historic income statements in order to prepare the following pro-forma Normalized Income Statements.

FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

Net Sales Revenue 28,282,860 28,804,580 29,243,400 30,019,270 31,041,420

Total Cost of Goods Sold 18,460,679 18,496,757 18,505,336 19,010,849 19,211,797

Gross Profit 9,822,181 10,307,823 10,738,064 11,008,422 11,829,623

Total General & Administrative Expenses 3,479,140 3,520,612 3,692,651 4,054,868 4,204,389

Income From Operations 6,343,041 6,787,211 7,045,413 6,953,554 7,625,234

Total Other Revenues and Expenses (403,774) (393,150) (403,153) (443,769) (476,062)

Income Before Taxes 5,939,267 6,394,061 6,642,260 6,509,785 7,149,172

Total Income Taxes 2,316,315 2,493,685 2,590,483 2,538,818 2,788,179

Net Income 3,622,952 3,900,376 4,051,777 3,970,967 4,360,993

Summary Historical Balance Sheets

The historical balance sheets report Sample Plastics Company's financial position as of the end of each year presented below.

FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

ASSETS

Total Current Assets 11,274,520 10,905,611 11,162,988 11,322,587 12,276,776

Net Fixed Assets 7,602,091 6,998,143 6,549,586 6,343,825 5,477,349

Net Intangible Assets 245,670 236,340 227,010 217,680 208,350

Total Other Noncurrent Assets 995,000 1,080,000 974,000 1,202,000 1,538,000

Total Assets 20,117,281 19,220,094 18,913,584 19,086,092 19,500,475

LIABILITIES & STOCKHOLDERS' EQUITY

Total Current Liabilities 3,953,964 3,210,490 2,868,131 2,749,873 2,665,313

Total Long-Term Debt 8,652,995 6,608,225 4,626,625 3,165,522 1,890,870

Total Other Long-Term Liabilities 3,327,000 3,527,000 3,727,000 3,827,000 4,027,000

Total Liabilities 15,933,959 13,345,715 11,221,756 9,742,395 8,583,183

Stockholders' Equity:

Preferred Stock 800,000 800,000 800,000 850,000 850,000

Common Stock 1,280,000 1,280,000 1,280,000 1,280,000 1,280,000

Retained Earnings 2,103,322 3,794,379 5,611,828 7,213,697 8,787,292

Total Stockholders' Equity 4,183,322 5,874,379 7,691,828 9,343,697 10,917,292

Total Liabilities & Stockholders' Equity 20,117,281 19,220,094 18,913,584 19,086,092 19,500,475

COMMENT: On the lines below, identify and describe any significant issues with respect to the historic



balance sheets. Please note that this comment will not print.

Balance Sheet Adjustments

In order to estimate the value of Sample Plastics Company, it was necessary to make certain normalization adjustments to the Balance Sheets. Normalization adjustments are made to reflect the Company's true economic position by eliminating or reclassifying items that are excessive or not related to the operations of the business. The following table presents a summary of the adjustments that were made to Sample Plastics Company's balance sheets.

FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

Nonoperating Assets 220,000 220,000 80,000 90,000 110,000 Normalization Adjustment (220,000) (220,000) (80,000) (90,000) (110,000) Adjusted Balance 0 0 0 0 0

Net Adjustments:

Asset Adjustments (220,000) (220,000) (80,000) (90,000) (110,000)

Retained Earnings Adjustment (220,000) (220,000) (80,000) (90,000) (110,000)

Notes to Balance Sheet Adjustments:

The Nonoperating Asset has been eliminated because it is personal in nature and does not contribute to the earnings generating capacity of the business.



Normalized Historical Balance Sheets

The normalization adjustments presented in the previous section were applied to the historic balance sheets in order to present the following pro-forma Normalized Balance Sheets.

FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

ASSETS

Total Current Assets 11,274,520 10,905,611 11,162,988 11,322,587 12,276,776

Net Fixed Assets 7,602,091 6,998,143 6,549,586 6,343,825 5,477,349

Net Intangible Assets 245,670 236,340 227,010 217,680 208,350

Total Other Noncurrent Assets 775,000 860,000 894,000 1,112,000 1,428,000

Total Assets 19,897,281 19,000,094 18,833,584 18,996,092 19,390,475

LIABILITIES & STOCKHOLDERS' EQUITY

Total Current Liabilities 3,953,964 3,210,490 2,868,131 2,749,873 2,665,313

Total Long-Term Debt 8,652,995 6,608,225 4,626,625 3,165,522 1,890,870

Total Other Long-Term Liabilities 3,327,000 3,527,000 3,727,000 3,827,000 4,027,000

Total Liabilities 15,933,959 13,345,715 11,221,756 9,742,395 8,583,183

Stockholders' Equity:

Preferred Stock 800,000 800,000 800,000 850,000 850,000

Common Stock 1,280,000 1,280,000 1,280,000 1,280,000 1,280,000

Retained Earnings 1,883,322 3,574,379 5,531,828 7,123,697 8,677,292

Total Stockholders' Equity 3,963,322 5,654,379 7,611,828 9,253,697 10,807,292

Total Liabilities & Stockholders' Equity 19,897,281 19,000,094 18,833,584 18,996,092 19,390,475

Summary Historical Statements of Cash Flows

The following table presents a summary of the historical Statements of Cash Flows for Sample Plastics Company.

FY 2012 FY 2013 FY 2014 FY 2015

Net Cash Flow From Operations 4,369,336 4,527,446 4,332,550 4,391,236

Net Cash Flow From Investments (286,861) (362,900) (834,000) (245,000)

Net Cash Flow From Financing (4,079,564) (4,101,189) (3,530,811) (3,904,867)

Net Cash Flow 2,911 63,357 (32,261) 241,369

Cash at Beginning of Year 426,000 428,911 492,268 460,007

Cash at End of Year 428,911 492,268 460,007 701,376

COMMENT: On the lines below, identify and describe any significant issues with respect to the historic statements of cash flows. Please note that this comment will not print.



Normalized Earnings and Net Cash Flow Summary

The following tables present various measures of normalized earnings and net cash flows that are available to apply in the valuation methods that follow later in this report.

Normalized Earnings

The table below summarizes the income and expense normalization adjustments and constructs the indicated measures of earnings on an adjusted basis.

FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

Total Income & Expense Adjustments Before Tax 194,999 212,000 253,000 310,000 340,000

Less: Tax Effect 76,051 82,681 98,671 120,902 132,602

Net Adjustments 118,948 129,319 154,329 189,098 207,398

Plus: Historic Net Income 3,504,003 3,771,057 3,897,449 3,781,869 4,153,595

Net Income 3,622,952 3,900,376 4,051,777 3,970,967 4,360,993

Plus: Normalized Income Taxes 2,316,315 2,493,685 2,590,483 2,538,818 2,788,179

EBT 5,939,267 6,394,061 6,642,260 6,509,785 7,149,172

Plus: Normalized Interest Expense 478,434 474,560 496,923 548,429 583,982

EBIT 6,417,701 6,868,621 7,139,183 7,058,214 7,733,154

Plus: Normalized Depreciation & Amortization 683,569 900,139 960,787 1,039,091 1,100,806

EBITDA 7,101,270 7,768,760 8,099,970 8,097,305 8,833,960

Normalized Equity Net Cash Flows (FCF-Equity)

The following table presents the elements that comprise Equity Net Cash Flows, also known as Free Cash Flow Available to Equity (FCF-E). Equity Net Cash Flows represent the amount of cash flow that is available for disbursement to equity investors and/or to reinvest in the company.

FY 2012 FY 2013 FY 2014 FY 2015

Net Income 3,900,376 4,051,777 3,970,967 4,360,993

Plus: Depreciation & Amortization 900,139 960,787 1,039,091 1,100,806

Less: Fixed Asset Purchases 286,861 502,900 824,000 225,000

Less: Non-Cash Changes in Net Working Capital 356,080 421,200 221,320 312,835

Plus: Changes in Short-Term Notes Payable 0 0 0 0

Plus: Changes in Current Long-Term Notes Payable 45,206 (39,589) 60,292 (50,215)

Plus: Changes in Long-Term Notes Payable (2,044,770) (1,981,600) (1,461,103) (1,274,652)

Less: Preferred Dividends 80,000 80,000 80,000 80,000

Equity Net Cash Flows 2,078,010 1,987,275 2,483,927 3,519,097



Normalized Invested Capital Net Cash Flows (FCF-TIC)

The following tables present two alternate calculations of Invested Capital Net Cash Flows, also known as Free Cash Flow Available to Total Invested Capital (FCF-TIC). Invested Capital Net Cash Flows represent the amount of cash flow that is available to service debt, distribute to equity investors and/or to reinvest in the company.

Invested Capital Net Cash Flows, Operating Income Method:

FY 2012 FY 2013 FY 2014 FY 2015

Normalized Operating Income 6,787,211 7,045,413 6,953,554 7,625,234

Less: Tax on Operating Income 2,307,652 2,395,440 2,364,208 2,592,580

Plus: Depreciation and Amortization From Operations 900,139 960,787 1,039,091 1,100,806



Invested Capital Net Cash Flows 4,736,757 4,686,660 4,583,117 5,595,625

Invested Capital Net Cash Flows, Net Income Method:

FY 2012 FY 2013 FY 2014 FY 2015

Normalized Net Income 3,900,376 4,051,777 3,970,967 4,360,993

Plus: Interest Expense (Net of Tax) 313,210 327,969 361,963 385,428

Plus: Depreciation and Amortization 900,139 960,787 1,039,091 1,100,806



Invested Capital Net Cash Flows 4,470,784 4,416,434 4,326,701 5,309,392



Analysis of Historic Financial Statements We have performed an analysis of the Company' s historic financial statements by calculating common-size financial statements on a percentage basis and traditional financial ratios. The common-size income statement items are presented as percentages of Total Sales and the balance sheet items a percentages of Total Assets in order to compare the relative composition of line items from year to year. The calculated financial ratios measure areas such as liquidity, leverage, profitability, etc. for each historic year.

In addition, the Company's common-size financial statements and financial ratios have been compared to aggregate industry data in order to provide a benchmark against other peer companies in the selected industry.The industry data used in this analysis is described below.

Although industry statistics are a useful source of general analytical data, there can be significant variation in the reporting practices and operational methods of companies within a given industry. Therefore, industry statistics as used throughout this report should not be regarded as absolute norms or standards.

Comparative Industry Data:

Source: RMA Annual Statement Studies

Industry Description: All Other Plastics Product Manufacturing

Industry NAICS code: 326199

Sample categorized by: Sales

Category size: $25MM && over

Industry Quartile (for ratios): Median Quartile

Number of companies in sample: 302

Date of industry information: 2015

Detailed industry description: This U.S. industry comprises establishments primarily engaged in manufacturing plastics products (except film, sheet, bags, profile shapes, pipes, pipe fittings, laminates, foam products, bottles, and plumbing fixtures).

COMMENT: This sample report only includes analytics and benchmark industry comparisons based on the unadjusted financial statements for the subject company. MoneySoft Business Valuation Special also produces the same analytics based on the normalized financial statements and those analytics are not included in this sample report.



Common-Size (Percentage) Financial Statements

This analysis includes a review of the Company's common-size income statement and balance sheet percentages on an unadjusted and a normalized basis. In order to portray the relative size of financial statement items for comparison over time, each line item in the common-size income statements is expressed as a percentage of total revenue and each line item in the common-size balance sheets is expressed as a percentage of total assets. The common-size income statements and balance sheets are presented below in summary format.

Common-Size Statements Based on Unadjusted Data

FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

Income Data: Net Sales 100.00% 100.00% 100.00% 100.00% 100.00% Gross Profit 34.73% 35.79% 36.72% 36.67% 38.11% Operating Expenses 12.85% 12.85% 13.35% 14.31% 14.41% Operating Profit 21.88% 22.94% 23.37% 22.36% 23.69% All Other Expenses (Net) 1.57% 1.48% 1.53% 1.71% 1.76% Profit Before Tax 20.31% 21.46% 21.85% 20.65% 21.94%

Assets: Cash & Equivalents 4.62% 5.17% 5.99% 6.55% 9.87% Trade Receivables (Net) 16.43% 17.80% 18.44% 18.98% 18.90% Inventory 31.81% 30.33% 31.00% 30.13% 30.49% All Other Current Assets 3.18% 3.43% 3.60% 3.67% 3.69% Total Current Assets 56.04% 56.74% 59.02% 59.32% 62.96% Fixed Assets (Net) 37.79% 36.41% 34.63% 33.24% 28.09% Intangibles (Net) 1.22% 1.23% 1.20% 1.14% 1.07% All Other NonCurrent Assets 4.95% 5.62% 5.15% 6.30% 7.89% Total Noncurrent Assets 43.96% 43.26% 40.98% 40.68% 37.04% Total Assets 100.00% 100.00% 100.00% 100.00% 100.00%

Liabilities & Net Worth: Notes Payable Short-Term 0.00% 0.00% 0.00% 0.00% 0.00% Current Maturity of Long-Term Debt 2.14% 2.47% 2.30% 2.60% 2.29% Trade Payables 16.07% 12.70% 12.31% 11.16% 10.69% Income Taxes Payable 0.13% 0.14% 0.15% 0.16% 0.16% All Other Current Liabilities 1.31% 1.39% 0.40% 0.50% 0.53% Total Current Liabilities 19.65% 16.70% 15.16% 14.41% 13.67% Long-Term Debt 43.01% 34.38% 24.46% 16.59% 9.70% Deferred Taxes 0.00% 0.00% 0.00% 0.00% 0.00% All Other NonCurrent Liabilities 16.54% 18.35% 19.71% 20.05% 20.65% Net worth 20.79% 30.56% 40.67% 48.96% 55.98% Total Liabilities & Net Worth 100.00% 100.00% 100.00% 100.00% 100.00%

COMMENT: On the lines below, identify and describe any significant trends or issues related to the Company's common-size financial statements. Please note that this comment will not print.



RMA Industry Data, Common-Size Statement Comparison

The Company's common-size financial statements are calculated from both the unadjusted and normalized financial statements and compared here to the selected RMA industry data. For each line item, the business vs. industry difference, variance and average variance are calculated and presented in the table below. A multi-year comparison is available as an attachment to this report.

RMA Common-Size Comparison to Unadjusted Company Financials

Business Industry 5 Yr Average FY 2015 2015 Variance Variance

Income Data: Net Sales 100.0% 100.0% Gross Profit 38.1% 22.3% 70.89% 63.24% Operating Expenses 14.4% 15.8% -8.77% -14.22% Operating Profit 23.7% 6.6% 259.01% 246.21% All Other Expenses (Net) 1.8% 1.1% 59.92% 46.21% Profit Before Tax 21.9% 5.5%

Assets: Cash & Equivalents 9.9% 5.6% 76.31% 15.02% Trade Receivables (Net) 18.9% 24.7% -23.49% -26.68% Inventory 30.5% 24.2% 26.00% 27.08% All Other Current 3.7% 2.4% 53.84% 46.42% Total Current Assets 63.0% 56.9% Fixed Assets (Net) 28.1% 30.1% -6.68% 13.06% Intangibles (Net) 1.1% 7.9% -86.48% -85.16% All Other Noncurrent 7.9% 5.2% 51.67% 15.00% Total Noncurrent Assets 37.0% 43.2% Total Assets 100.0% 100.1%

Liabilities: Notes Payable Short-Term 0.0% 8.9% -100.00% -100.00% Current Maturity Of Long-Term Debt 2.3% 3.4% -32.75% -30.58% Trade Payables 10.7% 13.4% -20.22% -6.08% Income Taxes Payable 0.2% 0.5% -67.74% -70.38% All Other Current Liabilities 0.5% 8.5% -93.76% -90.29% Total Current Liabilities 13.7% 34.7% Long-Term Debt 9.7% 16.1% -39.77% 59.18% Deferred Taxes 0.0% 0.9% -100.00% -100.00% All Other NonCurrent Liabilities 20.7% 7.8% 164.75% 144.35% Net Worth 56.0% 40.5% 38.23% -2.73% Total Liabilities & Net Worth 100.0% 100.0%

COMMENT: On the lines below, identify and describe any significant variance of the business as compared to the industry common-size financial statements. Please note that this comment will not print.



Financial Ratio Analysis

As part of the valuation, various financial ratios have been calculated from each year's financial statements as presented in this report. These ratios measure Sample Plastics Company's liquidity positions, coverage capacity, leverage/capitalization, operating efficiency and equity performance.

1. Liquidity ratios measure the short-term ability of a company to meet its maturing obligations. 2. Coverage ratios measure the degree of protection for long-term creditors and investors and the margin by which certain obligations of a company can be met. 3. Leverage/capitalization ratios measure the amount of a company's operations that are financed from debt versus financed from equity. 4. Operating ratios measure the efficiency and productivity of a company using the resources that are available and the returns on sales and investments. 5. Equity ratios measure the performance of assets and earnings in relation to common and preferred equity.

Ratios Based on Unadjusted Data

FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

Liquidity Ratios: Current 2.85 3.40 3.89 4.12 4.61 Quick 1.07 1.38 1.61 1.77 2.11 Accounts Receivable Turnover 8.56 8.42 8.39 8.29 8.42 Days' Receivable 42.06 42.76 42.93 43.45 42.74 Inventory Turnover 2.88 3.17 3.16 3.31 3.23 Days' Inventory 124.81 113.47 114.06 108.89 111.42 Accounts Payable Turnover 5.71 7.58 7.95 8.93 9.22 Days' payable 63.05 47.50 45.30 40.33 39.06 Working Capital Turnover 3.86 3.74 3.53 3.50 3.23 Inventory as a % of Total Current Assets 56.77% 53.46% 52.52% 50.78% 48.43% Total Current Assets as a % of Total Assets 56.04% 56.74% 59.02% 59.32% 62.96%

Coverage Ratios: Times Interest Earned 13.01 14.03 13.86 12.30 12.66 Current Portion of Long-Term Debt Coverage 9.73 9.83 11.15 9.72 11.78 Principal & Interest Coverage 13.01 1.77 1.81 2.37 2.68 Preferred Dividend Coverage 43.80 47.14 48.72 47.27 51.92

Leverage/Capitalization Ratios: Fixed Assets to Tangible Net Worth 1.93 1.24 0.88 0.70 0.51 Total Debt to Tangible Net Worth 4.05 2.37 1.50 1.07 0.80 Short-Term Debt to Total Debt 24.81% 24.06% 25.56% 28.23% 31.05% Short-Term Debt to Net Worth 94.52% 54.65% 37.29% 29.43% 24.41% Total Debt to Total Assets 79.21% 69.44% 59.33% 51.04% 44.02%

Operating Ratios: Percent Return on Tangible Net Worth 145.88% 109.65% 85.59% 67.94% 63.58%



Percent Return on Total Assets 28.55% 32.16% 33.78% 32.48% 34.92% Net Sales to Net Fixed Assets 3.72 4.12 4.46 4.73 5.67 Net Sales to Total Assets 1.41 1.50 1.55 1.57 1.59 Percent Depreciation & Amortization to Net Sales 2.42% 3.12% 3.29% 3.46% 3.55% Percent Officer Salaries to Net Sales 3.71% 3.82% 3.93% 4.00% 4.03% Total Sales to Net Worth 6.86 4.99 3.85 3.26 2.92 Revenue Growth Percentage 2.16% 1.06% 2.87% 4.39%

Equity Ratios: Net Book Value Per Share of Preferred Stock 3.94 5.64 7.46 9.13 10.71 Net Book Value Per Share of Common Stock 0.39 0.60 0.83 1.03 1.23 Percent Earnings Payout 3.65% 54.19% 52.39% 56.73% 61.37% Percent Earnings Retention 96.35% 45.81% 47.61% 43.27% 38.63% Dividends Per Common Share 0.02 0.25 0.25 0.26 0.31 Simple Earnings Per Share 0.43 0.46 0.48 0.46 0.51

COMMENT: For each group of ratios listed above, identify the importance of any individual ratios and discuss any significant trends over time. Please note that this comment will not print.



RMA Industry Data, Ratio Comparison

The Company's ratios are calculated from the financial statements and compared here to the selected RMA industry data. For each ratio, the business vs. industry difference, variance and average variance are calculated and presented in the table below. A multi-year comparison is available as an attachment to this report.

RMA Ratio Comparison Based on Unadjusted Data

Business Industry 5 Yr Avg. FY 2015 2015 Variance Variance

Liquidity Ratios: Current Ratio 4.6 1.7 170.95% 121.93% Quick Ratio 2.1 0.9 133.90% 76.31% Accounts Receivable Turnover 8.4 8.0 5.29% 5.18% Inventory Turnover 3.2 6.5 -50.29% -51.54% Accounts Payable Turnover 9.2 12.5 -26.27% -36.99% Working Capital Turnover 3.2 8.5 -62.00% -57.97%

Coverage Ratios: Times Interest Earned 12.7 8.1 56.30% 62.61% Current Portion of Long-Term Debt Coverage Ratio 11.8 3.9 202.18% 167.76%

Leverage/Capitalization Ratios: Fixed Assets to Tangible Net Worth 0.5 0.9 -43.17% 16.80% Total Debt to Tangible Net Worth 0.8 1.6 -49.91% 22.32%

Operating Ratios: Percent Return On Tangible Net Worth 63.6% 23.4% 171.73% 303.97% Percent Return On Total Assets 34.9% 8.4% 315.69% 285.48% Net Sales to Net Fixed Assets 5.7 6.2 -8.59% -26.77% Net Sales to Total Assets 1.6 1.8 -11.57% -15.38% Percent Depreciation & Amortization to Net Sales 3.5% 2.8% 26.65% 13.11% Percent Officer Salaries to Net Sales 4.0% 1.5% 168.46% 159.84%

COMMENT: On the lines below, identify and describe any significant variance of the business as compared to industry ratios. Please note that this comment will not print.



Valuation of Sample Plastics Company We were engaged by the Board of Directors of Sample Plastics Company to issue a Detailed Report as defined in the Statement on Standards for Valuation Services (SSVS) of the American Institute of Certified Public Accountants. Our objective was to estimate the Fair Market Value of 100% of Sample Plastics Company's common stock as of December 31, 2015.

The standard of value used in our valuation of Sample Plastics Company is Fair Market Value. Fair Market Value is defined in IRS Revenue Ruling 59-60 as: “The price at which the property would change hands between a willing buyer and a willing seller when the former is not under any compulsion to buy and the latter is not under any compulsion to sell, both parties having reasonable knowledge of relevant facts. Court decisions frequently state in addition that the hypothetical buyer and seller are assumed to be able, as well as willing, to trade and to be well informed about the property and concerning the market for such property.”

The purpose of this valuation is for the contemplated sale of the business. This report is prepared for the Board of Directors for Sample Plastics Company and should not be used by others. This report is dated September 25, 2016.

COMMENT: Explain the purpose of the valuation in as much detail as necessary. Also define the person or entity that engaged you and the intended users of this valuation. Please note that this comment will not print.

There are a large number of factors to consider when estimating the common stock value of any business entity. These factors vary for each valuation depending on the unique circumstances of the business enterprise and general economic conditions that exist at the effective date of the valuation. However, fundamental guidelines of the factors to consider in any valuation have been established. The most commonly used valuation guidelines are derived from the Internal Revenue Service's Revenue Ruling 59-60. Revenue Ruling 59-60 states that in the valuation of the stock of closely held businesses, the following factors, although not all inclusive, are fundamental and require careful consideration in each case:

a) The nature of the business and the history of the enterprise from its inception.

b) The economic outlook in general and the condition and outlook of the specific industry in particular.

c) The book value of the stock and the financial condition of the business.

d) The earning capacity of the company.

e) The dividend-paying capacity.

f) Whether or not the enterprise has goodwill or other intangible value.

g) Sales of the stock and the size of the block of stock to be valued.

h) The market price of stocks of corporations engaged in the same or a similar line of business having their stocks actively traded in a free and open market, either on an exchange or over-the-counter.

Based on circumstances unique to Sample Plastics Company as of December 31, 2015, additional factors have been considered.

COMMENT: Identify and describe all additional factors considered significant in relation to the subject company at the date of the valuation. Please note that this comment will not print.



In addition to providing general valuation guidelines, Revenue Ruling 59-60 outlines other considerations and techniques for valuing the stock of closely held businesses. The techniques are commonly divided into general approaches, i.e., the Asset, Income and Market approaches. Specific methods are then used to estimate the value of the total business entity under each approach. Our conclusion of Fair Market Value is determined based on the results of these methods and the specific circumstances surrounding the interest being valued.



Overview of Valuation Approaches and Methods

As previously specified, various approaches have been used to value Sample Plastics Company. These approaches, described below, are the: 1) Asset Approach, 2) Income Approach, and 3) Market Approach.

Asset Approach

The Asset Approach is generally considered to yield the minimum benchmark of value for an operating enterprise. The most common methods within this approach are Net Asset Value and Liquidation Value. Net Asset Value represents net equity of the business after assets and liabilities have been adjusted to their fair market values. The Liquidation Value of the business represents the present value of the estimated net proceeds from liquidating the Company's assets and paying off its liabilities.

Income Approach

The Income Approach serves to estimate value by considering the income (benefits) generated by the asset over a period of time. This approach is based on the fundamental valuation principle that the value of a business is equal to the present worth of the future benefits of ownership. The term income does not necessarily refer to income in the accounting sense but to future benefits accruing to the owner. The most common methods under this approach are Capitalization of Earnings and Discounted Future Earnings. Under the Capitalization of Earnings method, normalized historic earnings are capitalized at a rate that reflects the risk inherent in the expected future growth in those earnings. The Discounted Future Earnings method discounts projected future earnings back to present value at a rate that reflects the risk inherent in the projected earnings. Additional methods under the Income Approach are Capitalization of Excess Earnings and Multiple of Discretionary Earnings. Commonly referred to as the “formula method,” the Capitalization of Excess Earnings method determines the value of tangible and intangible assets separately and combines these component values for an indication of total entity value. Under the Multiple of Discretionary Earnings method, the entity is valued based on a multiple of “discretionary earnings,” i.e., earnings available to the owner who is also a manager. Both of these methods are normally used to value small businesses and professional practices.

Market Approach

The Market Approach compares the subject company to the prices of similar companies operating in the same industry. Comparable companies can be privately owned or publicly traded where the valuation multiples are determined from the purchase/sale price for the company. A common problem for privately owned businesses is a lack of publicly available comparable data. Comparable companies can also be publicly traded where the valuation multiples are derived from the trading price for the public companies stock as of the date of the valuation. The methods utilized under each approach are presented and discussed in the following sections.

COMMENT: The following sections discuss all of the valuation methods available in the DealSense program



and their respective results. You are encouraged to modify these sections for each different valuation assignment as follows:

* Modify this document based on the specific methods used and procedures performed in each valuation assignment.

* Elaborate on the methods that were accepted and discuss the selection process used to accept the individual valuation methods. Valuation weights can be assigned at the individual valuation method level, at the data-source level (for market approach methods), at the valuation approach level (i.e. asset, Income, market approaches), or by any combination thereof. Identify your selection criteria at each level.

* Certain valuation methods may be presented in the report but have not been given any weight in the conclusions. Any valuation method that is presented but not given any weight is considered rejected. For each rejected method, include an explanation of why the method was rejected.

* If any past transactions in the subject company's stock have been identified, discuss why they were or were not considered in the valuation conclusions.

Prior Sales of Company's Stock

Prior sales of a Company's stock can potentially provide a meaningful indication of the stock's value if the transactions were at arm's length. The following table presents details about past sales of the company's stock.

Number of Purchase Price Per Equity Transaction Transaction Description Shares Price Share Class Date

Purchased by John Jones 375,000 900,000 2.40000 A 12/31/2010 Purchased by John Jones 500,000 1,300,000 2.60000 A 6/30/2013

COMMENT: For each prior transaction, discuss whether or not the transaction provides a meaningful indication of value as of the valuation date. Factors to consider include but are not limited to whether or not the transaction was conducted at arm's length, whether the sale was forced or distressed, the size of the block of shares sold and the date of the transaction in relation to the valuation date. Please note that this comment will not print.

Nonoperating Assets and Liabilities

We have identified certain nonoperating assets and liabilities that are included on Sample Plastics Company's balance sheet as of the date of the valuation. Nonoperating assets and liabilities are those that do not contribute to the earnings generating capacity of the business.

COMMENT: Provide a description of nonoperating and/or nonoperating liabilities. Please note that this comment will not print.

Nonoperating Assets in the amount of ($110,000) have been eliminated via a normalization adjustment because the assets are not utilized in the operations of the business.



Preferred Stock Valuation

The value of Sample Plastics Company's preferred stock based on market yields for comparable preferred stocks is estimated to be $1,210,000. In the preferred stock valuation, each class of Sample Plastics Company's preferred stock is valued by dividing the preferred dividends for that class by the market yield for comparable preferred stocks. The value of total preferred stock is presented in the following table.

Adjustment Over/(Under) Classes of Normalized Stated Adjusted Dividends Value Per Normalized Market Value of Preferred Stock Balance Yield Adjustment Yield (a) Per Class (b) Class (b/a) Balance Adjustment Preferred

Preferred Class A 550,000 7.00% 0.00% 7.00% 51,700 738,571 188,571 0 738,571 Preferred Class B 300,000 6.00% 0.00% 6.00% 28,300 471,667 171,667 0 471,667 Total 850,000 80,000 1,210,238 360,238 0 1,210,238 Indicated Value of Preferred Stock 1,210,000 Book Value of Preferred Stock 850,000 Premium of FMV over Book Value 360,000

Asset Approach

Net Asset Value

The Net Asset Value of Sample Plastics Company is estimated to be $11,350,000. In the Net Asset Value method, the assets and liabilities are valued individually and the assets are assumed to be disposed in an orderly disposition. The proceeds from the orderly disposition of assets are used to pay all liabilities and pay any taxes resulting from gains on disposal of the assets. The value of total assets less the value of total liabilities less any tax from gains on the orderly disposal of assets results in the Calculated Equity Value.

Assets and liabilities from the most recent historic, normalized balance sheet have been adjusted to their individual tax bases. Assets and liabilities were further adjusted to reflect their individual values. A tax adjustment in the amount of $1,118,144 was then estimated based on the difference between the value and the tax basis of assets using an effective tax rate of 39.00%.

COMMENT: Describe the method(s) used for determining the individual asset and liability values, e.g., by separate appraisal. Also state the standard of value used to value the individual assets and liabilities, e.g., fair market value. The standard of value used in the Net Asset Value method should generally be consistent with the standard of value used in the overall business appraisal. Please note this comment will not print.

Net Asset Value

Total Asset Value 22,257,475 Less: Value of Total Liabilities 8,583,183 Less: Estimated Taxes on Gain / (Loss) from Sale of Assets 1,118,144 Less: Market Value of Preferred Stock 1,210,000 Calculated Equity Value 11,346,147

Indicated Equity Value 11,350,000



Liquidation Value

The Liquidation Value of Sample Plastics Company is estimated to be $8,620,000. In the Liquidation Value method, the assets and liabilities are valued individually and the assets are assumed to be disposed in a forced liquidation. The proceeds from the forced liquidation of assets are used to pay all liabilities, pay any taxes resulting from gains on liquidation of the assets and pay any associated liquidation costs. The liquidation value of total assets less the value of total liabilities less any tax from gains on the liquidation of assets, less any liquidation costs results in the Calculated Equity Value.

Assets and liabilities from the most recent historic normalized balance sheet have first been adjusted to reflect their individual values in an orderly disposition. Assets and liabilities were further adjusted to reflect their value in a forced liquidation. A tax adjustment in the amount of $(627,369) was then estimated based on the difference between the liquidation value and the tax basis of assets and liabilities using an effective tax rate of 39.00%. In addition, estimated liquidation costs in the amount of $273,802 have been deducted. See the Liquidation Value schedule for detailed value calculations and the Estimated Liquidation Cost schedule for the calculation of estimated liquidation costs.

COMMENT: Describe the method(s) used for determining the individual asset and liability values, e.g., by separate appraisal. Also state the standard of value used to value the individual assets and liabilities, e.g., fair market value. The standard of value used in the Liquidation Value method should generally be consistent with the standard of value used in the overall business appraisal. Please note this comment will not print.

Liquidation Value

Liquidation Value of Assets 18,055,658 Less: Liquidation Value of Liabilities 8,583,183 Less: Estimated Taxes on Gain / (Loss) from Liquidation of Assets (627,369) Less: Estimated Liquidation Costs 273,802 Less: Fair Market Value of Preferred Stock 1,210,000 Calculated Equity Value 8,616,042




Income Approach

Discount & Capitalization Rate Estimates

In order to value the enterprise based on earnings it generates, various risk rates applicable to historic and projected earnings have been estimated. Generally stated, these risk-adjusted rates reflect the expected rate of return attainable on alternative investment opportunities with comparable risk.

First, a Discount Rate applicable to projected earnings has been calculated for use in the Discounted Cash Flow and Discounted Future Earnings valuation methods. This Discount Rate is then converted into a Capitalization Rate which is applicable to historic earnings for use in the Capitalization of Earnings valuation method. The calculations are summarized in the table below.

Discount Rate Method: Build-Up Method

Risk-Free Rate 2.70%

Other Risk Factors / Premiums Equity Risk Premium 6.00% Size Risk Premium 11.00% Industry Risk Premium 2.00% Company-Specific Risk 7.00% Discount Rate 28.70%

(Applied to future benefit stream.)

Less: Long-Term Growth in Benefit Stream 6.00%

Capitalization Rate 22.70%

Divided by: 1 + Long-Term Growth Rate 106.00%

Historic Earnings Capitalization Rate 21.42% Benefit Stream Conversion Adjustment -6.27%

Adjusted Historic Earnings Capitalization Rate 15.15% (Applied to historic benefit stream.)

Excess Earnings Capitalization Rate 26.00% (Applied to historic excess earnings benefit stream.)

COMMENT: Un-levered Betas can be calculated using a number of different methods. Describe the method you used to arrive at the Un-levered Beta and cite the source of the data. The calculation to Re-lever the Beta is presented above. Please note that this comment will not print.

In developing the Discount and Capitalization Rates to apply to the benefit stream of Sample Plastics Company, the Build-Up Model was used. The Build-Up Model is based on a combination of risk factors including a Risk-Free Rate, a Market Equity Risk Premium, a Size Premium and other identifiable risk factors specific to the subject company. When added together, these risk factors provide an indication of the Discount Rate for the subject company. This Discount Rate represents the total return, in terms of cash flows and appreciation in value that an investor would require in order to make an equity investment in the subject company.



COMMENT: Provide an explanation of each of the risk factors identified in the Build-Up Model and document the source of the data. The Long-Term U.S. Treasury Bond yield to maturity prevailing on the date of (or within the week of) the effective date of the valuation is commonly used to represent the Risk-Free Rate. The Market Equity Risk Premium is the return in excess of the Risk-Free Rate that an average equity investor would require. The Size Premium is generally used if the subject company is significantly smaller than the companies used in the formulation of the Market Equity Risk Premium. Document all other incremental risk factors identified in the development of the discount rate. Please note that the Build-Up Model is normally used for small companies or if no valid comparable company data is available. If no valid comparable company data is available, that fact should be disclosed here. Please note that this comment will not print.

Subject Company Data Used in Capitalization of Earnings and Excess Earnings Methods

We used the following benefit streams for the subject company to apply in certain valuation methods under the Income Approach.

(Comment: Provide your rationale for the selected benefit stream and time period used for the subject company's benefit stream, e.g. Equity Free Cash Flow and most recent historic, etc. Also, if you are using Weighted Average, document your assumptions for the weights you assigned to each year's benefit stream. This comment will not print.)

Equity Net Cash Flows (FCF-Equity), Historic/Normalized:

FY 2012 FY 2013 FY 2014 FY 2015 Net Income 3,900,376 4,051,777 3,970,967 4,360,993

Plus: Depreciation & Amortization 900,139 960,787 1,039,091 1,100,806


Less: Changes in Net Working Capital (Adjusted) 356,080 421,200 221,320 312,835

Plus: Changes in Current Long-Term Notes Payable 45,206 (39,589) 60,292 (50,215)

Plus: Changes in Long-Term Notes Payable (2,044,770) (1,981,600) (1,461,103) (1,274,652)

Less: Preferred Dividends 80,000 80,000 80,000 80,000

Equity Net Cash Flows 2,078,010 1,987,275 2,483,927 3,519,097



Changes in Net Working Capital Used in FCF-Equity and FCF-TIC, Historic/Normalized

FY 2011 FY 2012 FY 2013 FY 2014 FY 2015

Current Assets:

Cash & Equivalents 930,220 993,911 1,132,858 1,249,687 1,925,386

Less: Adjustment to Cash & Equivalents 930,220 993,911 1,132,858 1,249,687 1,925,386

Accounts Receivable (Net) 3,304,300 3,421,700 3,487,130 3,622,900 3,685,390

Inventory 6,400,000 5,830,000 5,863,000 5,750,000 5,946,000

All Other Current Assets 640,000 660,000 680,000 700,000 720,000

Total Current Assets (Adjusted) 10,344,300 9,911,700 10,030,130 10,072,900 10,351,390

Current Liabilities (Except Notes Payable):

Accounts Payable 3,233,100 2,440,800 2,328,350 2,129,650 2,084,600

Revolving Lines of Credit 0 0 0 0 0

Less: Adjustment to Revolving Lines of Credit 0 0 0 0 0

Taxes Payable 26,200 27,450 28,500 29,650 31,455

All Other Current Liabilities 264,500 266,870 75,500 94,500 103,400

Total Current Liabilities (Adjusted) 3,523,800 2,735,120 2,432,350 2,253,800 2,219,455

Net Working Capital (Adjusted) 6,820,500 7,176,580 7,597,780 7,819,100 8,131,935

Equity Net Cash Flows, Weighted Average

Normalized Equity Weighted Equity Year Net Cash Flows Weight Net Cash Flows FY 2012 2,078,010 1 138,534 FY 2013 1,987,275 2 264,970 FY 2014 2,483,927 3 496,785 FY 2015 3,519,097 4 938,426 FY 2016 5,390,957 5 1,796,986 Weighted Average 15 3,635,701



Capitalization of Earnings Method

The Capitalization of Earnings method arrives at an estimate of value by dividing current normalized earnings, which are weighted and averaged to approximate future earnings expectations, by a capitalization rate. As shown below, The Total Entity Value of Sample Plastics Company based on the Capitalization of Earnings method is estimated to be $22,790,000. In the Capitalization of Earnings method, normalized Weighted Average Equity Net Cash Flows is divided by the capitalization rate, 15.15%, to determine Total Entity Value. See the Income Statement Adjustments section for a listing of any adjustments made to historic earnings and the Discount & Capitalization Rates section for the capitalization rate calculations.

Capitalization of Earnings Normalized Weighting Weighted Equity Net Cash Flows Factor Earnings Fiscal Year End 2012 2,078,010 1.0 2,078,010 Fiscal Year End 2013 1,987,275 2.0 3,974,551 Fiscal Year End 2014 2,483,927 3.0 7,451,782 Fiscal Year End 2015 3,519,097 4.0 14,076,389 Projected Dec 2016 5,390,957 5.0 26,954,784 Sum of Weighted Earnings 54,535,516 Divided by: Sum of Weighting Factors 15.0 Weighted Average Equity Net Cash Flows 3,635,701 Divided by: Historic Capitalization Rate 15.15% Total Entity Value 23,998,027 Less: Market Value of Preferred Stock 1,210,000 Calculated Equity Value 22,788,027


Capitalization of Excess Earnings

Usually, intangible assets are not reported on the balance sheet unless purchased. However, the existence of and the value for any intangible assets should be considered. A number of methodologies have been developed to estimate intangible assets of a business. One commonly used method is the excess earnings method. The excess earnings method was developed by the U.S. Treasury Department in 1920 in Appeals and Review Memorandum 34 (ARM34). Its current version is found in Revenue Ruling 68-609. The excess earnings method is commonly used in valuing small businesses and professional practices. The Internal Revenue Service suggests that it is to be used only when no better basis exists for separately estimating the value of the intangible assets.

The model for the excess earnings method computes the company's equity value based on the "appraised" value of tangible assets plus an additional amount for intangible assets. A company's tangible assets should provide a current return to the owner. Since there are risks associated with owning the company's assets, the rate of return on those assets should be commensurate with the risks involved. That rate of return should be either the prevailing industry rate of return required to attract capital to that industry or an appropriate rate above the risk-free rate. Any returns produced by the company above the rate on tangible assets are considered to arise from intangible assets. Accordingly, the weighted average capitalization rate for tangible assets and intangible assets should be equivalent to the capitalization rate of the entire company.

In using the excess earnings method, a reasonable rate of return on net tangible assets was first calculated based on the cost of borrowing against those assets plus the cost of equity required to support the remaining



investment in those assets, as shown in the following schedule.

Percent of Weighted Cost Total Capital Cost

Required Return on Debt 5.48% 38.69% 2.12% Required Return on Equity 15.15% 61.31% 9.29% Rate of Return on Net Tangible Assets 11.41%

(See the Rate of Return on Net Tangible Assets schedule for the calculation of the required return on debt.)

Then, weighted average, normalized Equity Net Cash Flows is compared to the reasonable rate of return. Excess earnings are defined as the difference between the weighted average earnings and the "normal" return. These excess earnings are then capitalized using the excess earnings capitalization rate of 26.00%. Therefore, capitalized excess earnings are an estimate of intangible value. This intangible value is then added to the appraised value of net tangible equity to estimate Total Entity Value. See the Income Statement Adjustments section for a listing of any adjustments made to historic earnings, the Discount and Capitalization Rates section for the excess earnings capitalization rate and the Net Asset Value schedule for the appraised value of net tangible equity.

As shown below, the Indicated Equity Value of Sample Plastics Company based on the Capitalization of Excess Earnings approach is estimated to be $19,457,336 and the selected (rounded) value is $19,460,000.

Capitalization of Excess Earnings Normalized Weighting Weighted Equity Net Cash Flows Factor Earnings Fiscal Year End 2012 2,078,010 1.0 2,078,010 Fiscal Year End 2013 1,987,275 2.0 3,974,551 Fiscal Year End 2014 2,483,927 3.0 7,451,782 Fiscal Year End 2015 3,519,097 4.0 14,076,389 Projected Dec 2016 5,390,957 5.0 26,954,784 Sum of Weighted Earnings 54,535,516 Divided by: Sum of Weighting Factors 15.0 Weighted Average Equity Net Cash Flows 3,635,701 Net Tangible Assets 11,910,942 Multiplied by: Rate of Return on Net Tangible Assets 11.41% Normal Return On Net Tangible Assets 1,359,038 Weighted Average Equity Net Cash Flows 3,635,701 Less: Normal Return on Net Tangible Assets 1,359,038 Excess Earnings 2,276,663 Divided by: Excess Earnings Capitalization Rate 26.00% Intangible Value 8,756,395 Plus: Net Tangible Assets 11,910,942 Total Entity Value 20,667,336 Less: Market Value of Preferred Stock 1,210,000 Calculated Equity Value 19,457,336




Discounted Future Earnings

The underlying premise for this valuation method is the basic valuation principle that an investment in a business is worth the present value of all the future benefits it will produce for its owner(s), with each expected future benefit discounted back to present value at a discount rate that reflects the risk (degree of uncertainty) that those benefits may not be realized. Therefore, the application of this method requires a determination of the present value of an expected future benefit stream that the business generates for that owner.

To determine the expected future income stream, we assisted management in preparing [-or- we used management's] projections of the financial statements for the first 5 years after the valuation date. A summary of the projections and the underlying assumptions are presented in an appendix to this report.

COMMENT: As discussed in Section 505 of PPC's Guide to Business Valuations, the financial statements may be forecasts or projections as defined by the AICPA. Thus, the term "projection" may need to be replaced with the term "forecast" depending on the assumptions used in preparing the financial statements. Please note that this comment will not print.

Equity Net Cash Flows (FCF-Equity), Projected:

FY 2016 FY 2017 FY 2018 FY 2019 FY 2020

Net Income 5,271,935 6,558,333 7,182,935 7,612,464 7,879,478

Plus: Depreciation & Amortization 1,253,071 1,193,397 1,315,571 1,235,429 1,194,286

Less: Fixed Asset Purchases 2,880,000 (0) 1,500,000 1,200,000 1,100,000

Changes in Net Working Capital (Adjusted) (1,038,274) 267,018 306,398 228,535 171,875

Plus: Changes in Short-Term Notes Payable 0 0 0 0 0

Plus: Changes in Current Long-Term Notes Payable

218,601 39,161 59,463 36,663 (124,325)

Plus: Changes in Long-Term Notes Payable 574,075 (703,620) (260,443) (397,634) (306,818)

Less: Preferred Dividends 85,000 85,000 85,000 85,000 85,000

Equity Net Cash Flows 5,390,957 6,735,252 6,406,128 6,973,386 7,285,746



Changes in Net Working Capital Used in FCF-Equity and FCF-TIC, Projected

Recent Historic

FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 FY 2020

Current Assets:

Cash & Equivalents 1,925,386 5,055,951 5,144,127 4,888,901 5,104,479 5,555,564

Less: Adjustment to Cash & Equivalents 1,925,386 5,055,951 5,144,127 4,888,901 5,104,479 5,555,564

Accounts Receivable (Net) 3,685,390 3,500,923 3,738,834 3,932,693 4,066,232 4,155,678

Inventory 5,946,000 5,254,566 5,255,649 5,403,442 5,519,324 5,612,198

All Other Current Assets 720,000 741,528 763,700 786,534 810,052 834,272

Total Current Assets (Adjusted) 10,351,390 9,497,017 9,758,183 10,122,669 10,395,608 10,602,148

Current Liabilities (Except Notes Payable):

Accounts Payable 2,084,600 2,276,979 2,277,448 2,341,491 2,391,707 2,431,952

Revolving Lines of Credit 0 0 0 0 0 0

Less: Adjustment to Revolving Lines of Credit 0 0 0 0 0 0

Taxes Payable 31,455 32,345 34,544 36,335 37,568 38,395

All Other Current Liabilities 103,400 94,032 85,513 77,765 70,720 64,312

Total Current Liabilities (Adjusted) 2,219,455 2,403,356 2,397,504 2,455,591 2,499,995 2,534,660

Net Working Capital (Adjusted) 8,131,935 7,093,661 7,360,679 7,667,077 7,895,613 8,067,488

Changes in Net Working Capital (Adjusted) (1,038,274) 267,018 306,398 228,535 171,875



Discounted Equity Net Cash Flows Value Calculations

The selected Equity Value based on the Discounted Equity Net Cash Flows method is $ as presented below. The underlying theory of the Discounted Cash Flow method states that the business is worth the present value, at the valuation date, of all expected future cash flows that the business will generate and are available to the owner(s).

We projected the expected Equity Net Cash Flows, also commonly referred to as Equity Free Cash Flows, for Discounting Convention: years and then discounted each year's cash flows back to present value using an annual discount rate of 28.70% that reflects the risk inherent in realizing the projected cash flows. Please see the Discount and Capitalization Rates section of this report for a description of the risk-adjusted Discount Rate.

Because we assume that the business will continue as a going concern beyond the term of the projections, we estimated a Terminal Value (also referred to as residual value) based on Equity Net Cash Flows from projected year Discounting Convention:. In determining Terminal Value, we first capitalized, or divided, the residual cash flows by the Capitalization Rate of 22.70% and then discounted that quantity back to present value.

Discounted Equity Net Cash Flows Projected Discount Present Value Present Equity Net Cash Flows Factor Factor Value FY 2016 5,390,957 0.500000 0.881476 4,751,999 FY 2017 6,735,252 1.500000 0.684908 4,613,028 FY 2018 6,406,128 2.500000 0.532174 3,409,175 FY 2019 6,973,386 3.500000 0.413500 2,883,495 FY 2020 7,285,746 4.500000 0.321290 2,340,837 Terminal Value of Equity Net Cash Flows ** 34,021,544 4.500000 0.321290 10,930,782 Operating Value 28,929,316 Less: Market Value of Preferred Stock 1,210,000 Calculated Equity Value 27,719,316


Mid-Year Discount Factors are Based on the Discount Rate of: 28.70%

Terminal Value is Based on the Capitalization Rate of: * 22.70%

* * Calculated as Terminal Equity Net Cash Flows x (1 + LT Growth Rate) / Capitalization Rate

We calculated the Present Value of each projected benefit in the previous table by multiplying the benefit by the Present Value Factor. The Present Value Factor is the multiplier that converts a projected benefit to its present value. It is derived for each projected period using the following formula:

Present Value Factor = 1/(1+Discount Rate)N

Where: The Discount Rate is the annual, risk-adjusted rate discussed previously.

N is the Discount Factor is the projected time period, in years, when the benefit occurs. This factor can use a mid-year or end-of-year convention as described below. Additionally, the Discount Factor is adjusted if the first projected period is a partial year.



The Discount Factor used in the Present Value Factor formula above must consider the timing of the projected benefits. If we assume that the benefits occur more or less evenly throughout the year, then a Mid-Year convention is appropriate. If we assume that the benefits occur at the end of the year, then an End-of-Year convention is appropriate. This is important because the convention can have a significant effect on the overall value. All other things equal, an End-of-Year convention will result in a higher level of discounting and therefore yields lower present values.

When end-of-year discounting is used, the Discount Factor for the first projected year is 1, for the second projected year is 2, etc. When mid-year discounting is used, the Discount Factor for the first projected year is .5, for the second projected year is 1.5, etc. We have selected Mid Year discounting as the most appropriate convention to apply to Sample Plastics Company's estimated future benefit stream.



Market Approach

The Market Approach utilizes market prices of comparable companies to approximate the value of the subject company. Companies that are considered comparable are in the same or similar line of business as the subject company and are a similar size in terms of profitability and financial position as the subject company. Market price information can be gathered from the stock trading prices of guideline public companies and/or from the prices paid in purchase or sale transactions for publicly traded and privately held companies.

Under the Market Approach, the price for a comparable company is expressed as a multiple of various measures of profitability and financial position. The price multiple from the comparable company is then applied to the respective measures of profitability and/or financial position of the subject company to determine the value of the subject company.

Transaction-By-Transaction Method

The Transaction-by-Transaction method is most appropriately utilized when detailed information is available for each comparable company transaction. Transactions are identified for companies in the same or similar line of business as the subject company and each transaction is analyzed individually. The transaction price and financial metrics are adjusted, if necessary, so that the purchase price and the financial metrics are calculated the same way for each comparable company transaction. Then the price multiples derived from each transaction are analyzed and multiples are selected to be applied to the subject company's measures of profitability and/or financial position.

Procedures for the Transaction-By-Transaction Method:

(Comment: Modify the procedures below based on the actual procedures performed. This comment will not print.)

1. Identify transactions for comparable companies.

2. Analyze each transaction and, if necessary, adjust purchase price and financial metrics of each comparable company so that the price and financial metrics are calculated the same way for each transaction.

3. Calculate price multiples for each transaction.

4. Perform statistical analysis on each multiple group to determine if that group of multiples is statistically reliable.

5. Select a multiple from each multiple group that is deemed to be statistically reliable.

6. Apply the selected price multiples to the respective profitability and/or financial position metric for the subject company to determine the indicated Market Value of Invested Capital (MVIC) or Equity value.

7. Certain types of assets are assumed to have not transferred in the transactions and therefore those assets are not included in the transaction price. If the same asset types exist for the subject company, add the value of the assets to the indicated MVIC and/or Equity value.

8. Convert each MVIC indication for the subject company to Equity value by deducting total debt. This procedure is bypassed for those multiples that directly result in an Equity value when they are applied to the subject company.



9. Deduct the value of any preferred stock to arrive at the indicated Equity value.

Guideline Public Company Method

In the Guideline Public Company Method, public companies are identified that are in the same or similar line of business as the subject company and are a similar size in terms of profitability and financial position as the subject company. Then the stock trading prices for the guideline public companies as of the date of the valuation are used to estimate the value of the subject company.

Procedures for the Guideline Public Company Method:

(Comment: Modify the procedures below based on the actual procedures performed. This comment will not print.)

1. Identify guideline public companies that are in the same or similar line of business as the subject company and are a similar size in terms of profitability and financial position as the subject company.

2. Determine the stock trading price for each guideline public company as of the date of the valuation of the subject company.

3. Analyze each guideline public company and, if necessary, adjust the financial metrics of each guideline public company so that the financial metrics are calculated the same way as for the subject company.

4. Calculate price multiples for each guideline public company based on the stock trading price and the financial metrics of each guideline public company.

5. Perform statistical analysis on each multiple group to determine if that group of multiples is statistically reliable.

6. Select a multiple from each multiple group that is deemed to be statistically reliable.

7. Apply the selected price multiples to the respective profitability and/or financial position metric for the subject company to determine the indicated Market Value of Invested Capital (MVIC).

8. Certain types of assets are assumed to not be included in the stock trading price. If those types of asset exist for the subject company, add the value of the assets to the indicated MVIC value.

9. Convert each MVIC indication for the subject company to Equity value by deducting total debt.

10. Deduct the value of any preferred stock to arrive at the indicated Equity value.

Subject Company Data Used in Market Approach

We used the following benefit streams for the subject company to apply in the valuation methods under the Market Approach.

(Comment: Provide your rationale for the time periods used for the subject company's benefit streams, e.g. most recent historic, historic average, etc. Also, if you are using Weighted Average, document your assumptions for the weights you assigned to each year's benefit stream. This comment will not print.)



Gross Sales Revenues, Weighted Average

Normalized Weighted Year Gross Sales Weight Gross Sales FY 2011 28,710,000 1 1,914,000 FY 2012 29,330,000 2 3,910,667 FY 2013 29,640,000 3 5,928,000 FY 2014 30,490,000 4 8,130,667 FY 2015 31,830,000 5 10,610,000 Weighted Average 15 30,493,333

Net Sales Revenues, Weighted Average

Normalized Weighted Year Net Sales Weight Net Sales FY 2011 28,282,860 1 1,885,524 FY 2012 28,804,580 2 3,840,611 FY 2013 29,243,400 3 5,848,680 FY 2014 30,019,270 4 8,005,139 FY 2015 31,041,420 5 10,347,140 Weighted Average 15 29,927,093

Gross Profit, Weighted Average

Normalized Weighted Year Gross Profit Weight Gross Profit FY 2011 9,822,181 1 654,812 FY 2012 10,307,823 2 1,374,376 FY 2013 10,738,064 3 2,147,613 FY 2014 11,008,422 4 2,935,579 FY 2015 11,829,623 5 3,943,208 Weighted Average 15 11,055,588

EBIT, Weighted Average

Normalized Weighted Year EBIT Weight EBIT FY 2011 6,417,701 1 427,847 FY 2012 6,868,621 2 915,816 FY 2013 7,139,183 3 1,427,837 FY 2014 7,058,214 4 1,882,190 FY 2015 7,733,154 5 2,577,718 Weighted Average 15 7,231,408

EBITDA, Weighted Average

Normalized Weighted



Year EBITDA Weight EBITDA FY 2011 7,101,270 1 473,418 FY 2012 7,768,760 2 1,035,835 FY 2013 8,099,970 3 1,619,994 FY 2014 8,097,305 4 2,159,281 FY 2015 8,833,960 5 2,944,653 Weighted Average 15 8,233,181

Net Income, Weighted Average

Normalized Weighted Year Net Income Weight Net Income FY 2011 3,622,952 1 241,530 FY 2012 3,900,376 2 520,050 FY 2013 4,051,777 3 810,355 FY 2014 3,970,967 4 1,058,925 FY 2015 4,360,993 5 1,453,664 Weighted Average 15 4,084,525

Cash Flow from Operations, Weighted Average

Normalized Weighted Cash Flow from Cash Flow from Year Operations Weight Operations FY 2011 FY 2012 4,380,744 1 438,074 FY 2013 4,452,418 2 890,484 FY 2014 4,671,909 3 1,401,573 FY 2015 4,473,265 4 1,789,306 Weighted Average 10 4,519,437

Book Value of Invested Capital (BVIC)

Total Stockholders' Equity 10,807,292 Total Other Long-Term Liabilities 4,027,000 Total Long-Term Debt 1,890,870 Book Value of Invested Capital (BVIC) 16,725,162



Done Deals Transactions Method

Business sale transactions from the Done Deals database have been used to estimate the value of Sample Plastics Company. When searching the Done Deals database, we selected transactions for companies that are considered comparable to Sample Plastics Company and then selected pricing multiples to apply to Sample Plastics Company's earnings and financial position.

Done Deals® is published by Practitioners Publishing Company, a Thompson Reuters company. Done Deals contains transaction details for public and private companies with purchase prices between USD$1 Million and USD$1 Billion. Transaction information is compiled from SEC filings made by public companies after acquiring other entities. Done Deals transaction data can include a sufficient level of detail to be analyzed under the Transaction-By-Transaction method.

Search Criteria

The search criteria paragraph(s) below contain the search parameter values that were used each time Done Deals records were exported. Edit each paragraph below and delete the search parameter items that do not include values. Please note that this comment will not print.

The primary Done Deals search parameters used in search #1 were: SIC Code 3089 3949 with a Transaction Closing Date Range from 1/1/2005 to 12/31/2015.

Search Results

Our search resulted in the identification of 3 asset sale transactions and 3 stock sale transactions. Of the total asset sale transactions identified, 3 were used in our analysis. Of the total stock sale transactions identified, 3 were used in our analysis.

COMMENT: Document the composition of your search results. Be sure to explain your reasons for excluding any transactions identified in your search of the Done Deals database. Please note that this comment will not print.



Statistical Analysis of Transactions

We performed a statistical analysis of the data in each multiple group. The analysis includes measures of statistical significance of the sample for each multiple group along with measures of distribution and central tendency of the data.

The following table presents statistics for the selected Asset Sale transactions from the Done Deals database: Done Deals Asset Transactions Invested Capital Price To:

Statistical Analysis Revenue EBITDA Net Income Cash Flow Assets Equity

Summary Total Records 3 3 3 3 3 3 Records Used for Statistical Analysis 3 3 3 2 3 3

Statistical Significance R-Squared 0.99279 0.96561 0.88725 0.62054 0.76926 0.95439 Standard Deviation 0.01649 1.94278 1.62161 0.07573 0.33329 0.17124 Coefficient of Variation 0.01587 0.37893 0.20446 0.01052 0.18473 0.04951

Distribution Maximum 1.056 7.143 9.025 7.250 2.096 3.564 Minimum 1.024 3.267 6.068 7.143 1.441 3.261 Range 0.033 3.876 2.957 0.107 0.655 0.303 Upper Decile 1.052 6.709 8.960 7.239 2.052 3.561 Upper Quartile 1.047 6.057 8.863 7.223 1.986 3.557 Median 1.037 4.971 8.700 7.196 1.875 3.551 Lower Quartile 1.030 4.119 7.384 7.170 1.658 3.406 Lower Decile 1.026 3.608 6.594 7.154 1.528 3.319

Central Tendency Mean 1.039 5.127 7.931 7.196 1.804 3.459 Harmonic Mean 1.039 4.635 7.682 7.196 1.760 3.453 Median 1.037 4.971 8.700 7.196 1.875 3.551

Multiple Selection

Based on our analysis of the transaction data, we have selected the following multiples to be applied to Sample Plastics Company's profitability and financial position metrics.

Asset Transactions / Multiple of Selected Invested Capital Price to: Mean Median Multiple Total Revenue 1.039 1.037 1.037 EBITDA 5.127 4.971 4.900 Net Income 7.931 8.700 8.700 Cash Flow from Operations 7.196 7.196 7.200 Total Assets 1.804 1.875 1.875 Total Equity 3.459 3.551 3.551

COMMENT: Selection of the transaction multiples is one of the most critical steps in the valuation methods under the Market Approach. Provide an explanation of your reasons for selecting each multiple. Also,



provide an explanation of your reasons for rejecting any multiples. Please note that this comment will not print.

Asset Equity Value Transactions

Selected Price to Revenue Multiple 1.037 Times: Total Revenue 29,927,093 Invested Capital Value 31,034,396 Plus: Asset Adjustments (a) 1,925,386 Adjusted Invested Capital Value 32,959,781

Less: Total Liabilities (b) 8,583,183

Less: Value of Preferred Stock 1,210,000 Calculated Equity Value 23,166,598


Asset Transactions

Selected Price to EBITDA Multiple 4.900 Times: EBITDA 8,233,181 Invested Capital Value 40,342,589 Plus: Asset Adjustments (a) 1,925,386 Adjusted Invested Capital Value 42,267,974




Asset Transactions

Selected Price to Total Equity Multiple 3.551 Times: Total Equity 10,807,292 Invested Capital Value 38,376,692 Plus: Asset Adjustments (a) 1,925,386 Adjusted Invested Capital Value 40,302,078






Guideline Public Company Method

The notion behind the Guideline Public Company method is that prices of publicly traded stocks in the same or a similar industry provide objective evidence as to values at which investors are willing to buy and sell interests in companies in that industry. We identified companies considered to be comparable to Sample Plastics Company and then calculated pricing multiples to apply to Sample Plastics Company's earnings and financial position.

In applying the comparative company valuation method, the analyst usually computes a value multiple for each comparative company. The appropriate multiple is then determined and adjusted for the unique aspects of the company being valued. This multiple is then applied to the company being valued to arrive at an estimate of value for the appropriate ownership interest.

A value multiple represents a ratio that uses a comparative company's stock price as the numerator and a measure of the comparative company's operating results (or financial position) as the denominator. Value multiples are usually computed on a per share basis, but can also be determined by dividing a company's total common stock market value by its total annual earnings or other measure. The most well-known value multiple is price/earnings (P/E) whereby a company's stock price is divided by its earnings per share. The process of computing the value multiples normally consists of the following procedures:

1. Determination of the appropriate stock price for each comparative company. This represents the numerator of the multiple.

2. Determination of the measure of operating results (earnings, gross cash flow, etc.) for the appropriate time period or financial position as of the valuation date. This represents the denominator of the multiple.

Comment: Insert the source and description of any Guideline Public Company data used in the valuation. Please note that this comment will not print.

Search Criteria

The application of this method depends on the selection of publicly traded comparative companies that are similar enough to Sample Plastics Company so as to provide a meaningful comparison. In our search for guideline public companies, we used the following search criteria:

COMMENT: Include a list of the search criteria and parameters you used when searching for guideline public companies. Your search criteria can include but are not limited to the following:

1. SIC Code, NAICS Code, Location and/or keywords.

2. Profitability and financial position measures including ranges for: Net Sales, Gross Profit, Operating Profit, EBIT, EBITDA, Net Income, Total Assets and Total Equity.

3. Financial performance ratios and other search criteria.



Search Results

Our search resulted in the identification of 2 guideline public companies. Of the total identified, data from 2 guideline public companies were used in our analysis.

COMMENT: Document the composition of your search results. Be sure to explain your reasons for excluding any companies identified in your search for Guideline Public Companies. Please note that this comment will not print.

Statistical Analysis of Transactions

We performed a statistical analysis of the data in each multiple group. The analysis includes measures of statistical significance of the sample for each multiple group along with measures of distribution and central tendency of the data.

The following table presents statistics for the selected Guideline Public Companies:

Guideline Public Company Multiples Invested Capital Price To:

Net Gross Statistical Analysis Sales Profit EBITDA EBIT BVIC

Summary Total Records 2 2 2 2 2 Records Used for Statistical Analysis 2 2 2 2 2

Statistical Significance R-Squared 1.00000 1.00000 1.00000 1.00000 1.00000 Standard Deviation 0.01039 0.77046 0.42971 1.35842 0.52679 Coefficient of Variation 0.01116 0.32479 0.13853 0.32369 0.36042

Distribution Maximum 0.939 2.917 3.406 5.157 1.834 Minimum 0.924 1.827 2.798 3.236 1.089 Range 0.015 1.090 0.608 1.921 0.745 Upper Decile 0.937 2.808 3.345 4.965 1.760 Upper Quartile 0.935 2.645 3.254 4.677 1.648 Median 0.931 2.372 3.102 4.197 1.462 Lower Quartile 0.928 2.100 2.950 3.716 1.275 Lower Decile 0.926 1.936 2.859 3.428 1.164

Central Tendency Mean 0.931 2.372 3.102 4.197 1.462 Harmonic Mean 0.931 2.247 3.072 3.977 1.367 Median 0.931 2.372 3.102 4.197 1.462



Multiple Selection

Based on our analysis of the Guideline Public Company price multiples, we have selected the following multiples to be applied to Sample Plastics Company's profitability and financial position metrics.

Multiple of Selected Market Value Invested Capital (MVIC) Price to: Mean Median Multiple Net Sales 0.931 0.931 0.93 Gross Profit 2.372 2.372 2.37 EBITDA 3.102 3.102 3.10 EBIT 4.197 4.197 4.20 Book Value of Invested Capital (BVIC) 1.462 1.462 1.46

COMMENT: Selection of the price multiples is one of the most critical steps in the valuation methods under the Market Approach. Provide an explanation of your reasons for selecting each multiple. Also, provide an explanation of your reasons for rejecting any multiples. Please note that this comment will not print.

Value Calculations Based on Guideline Public Company MVIC Price to Net Sales Multiple

We have calculated the Equity Value for Sample Plastics Company based on the selected MVIC Price to Net Sales Multiple from the Guideline Public Companies. The calculations are presented in the following table.

Guideline Public Company Price to Net Sales Multiple Equity Value

Selected MVIC Price to Net Sales Multiple 0.93 Times: Net Sales 29,927,093 MVIC 27,832,197 Plus: Asset Adjustments (a) 1,925,386 Adjusted MVIC 29,757,582

MVIC to Equity Value Conversion

Less: Liability Adjustments (b) 2,336,728 Less: Normalized Value of Preferred Stock 1,210,000 Calculated Equity Value 26,210,854




Value Calculations Based on Guideline Public Company MVIC Price to EBITDA Multiple

We have calculated the Equity Value for Sample Plastics Company based on the selected MVIC Price to EBITDA Multiple from the Guideline Public Companies. The calculations are presented in the following table.

Guideline Public Company MVIC Price to EBITDA Multiple Equity Value

Selected MVIC Price to EBITDA Multiple 3.10 Times: EBITDA 8,233,181 MVIC 25,522,862 Plus: Asset Adjustments (a) 1,925,386 Adjusted MVIC 27,448,248




Value Calculations Based on Guideline Public Company MVIC Price to EBIT Multiple

We have calculated the Equity Value for Sample Plastics Company based on the selected MVIC Price to EBIT Multiple from the Guideline Public Companies. The calculations are presented in the following table.

Guideline Public Company MVIC Price to EBIT Multiple Equity Value

Selected MVIC Price to EBIT Multiple 4.20 Times: EBIT 7,231,408 MVIC 30,371,913 Plus: Asset Adjustments (a) 1,925,386 Adjusted MVIC 32,297,299






Equity Value Conclusions

We have estimated the Fair Market Value on a controlling interest, marketable basis for 100% of Sample Plastics Company's common stock as of December 31, 2015 as described within this report.

Our conclusion is $23,840,000 as summarized below. This conclusion is subject to the Statement of Assumptions and Limiting Conditions and the Representations presented in appendices to this report. We have no obligation to update this report or our conclusion of value for information that comes to our attention after the date of this report.

In arriving at this conclusion, we relied on a “value in use” or going-concern premise. This premise assumes that the Company is an ongoing business enterprise with management operating in a rational way with a goal of maximizing shareholder value.

COMMENT: If some premise of value other than going concern is used, modify the above paragraph accordingly. Example 1: “In arriving at this conclusion, we relied on a premise of orderly liquidation. This premise assumes that the assets of the business are disposed on a piecemeal basis with normal exposure for sale on the secondary market.” Example 2: “In arriving at this conclusion, we relied on a premise of forced liquidation. This premise assumes that the assets of the business are disposed on a piecemeal basis with less than normal exposure for sale on the secondary market.” Please note that this comment will not print.



Enterprise-Level Equity Value

When there is more than one indication of value produced by the different valuation approaches and methods, we need to reconcile these different indications of value. Therefore, in arriving at our conclusion of the enterprise equity value for Sample Plastics Company, we assigned relative weights to the individual indications of enterprise-level equity value and calculated a weighted average of these values. The weighted-average enterprise-level equity value is $27,720,000 as presented in the following table.

COMMENT: Provide an explanation of the rationale used to assign weights to the individual valuation methods. Include the reasons why any method(s) were given a higher relative weight and therefore given more emphasis than other methods in the conclusions. Please note that this comment will not print.

Assigned Indicated Assigned Weight / Weighted Enterprise-Level Equity Value Equity Value Weight Total Weights Equity Value

Asset Approach: Net Asset 11,350,000 0 0.00 0 Liquidation 8,620,000 0 0.00 0

Income Approach: Capitalization of Earnings 22,790,000 0 0.00 0 Capitalization of Excess Earnings 19,460,000 0 0.00 0 Discounted Equity Net Cash Flow 27,720,000 1 1.00 27,720,000

Market Approach:

Done Deals Database

Asset Transactions: Revenue 23,167,000 0 0.00 0 EBITDA 32,480,000 0 0.00 0 Stockholder's Equity 30,510,000 0 0.00 0

Guideline Public Net Sales 26,210,000 0 0.00 0 EBITDA 23,900,000 0 0.00 0 EBIT 28,750,000 0 0.00 0

Total 1 Total Weighted Equity Value $27,720,000

Selected Conclusion of Enterprise-Level Equity Value (Rounded) $27,720,000



Enterprise-Level Premiums / Discounts

The following enterprise-level premiums and/or discounts have been applied to the selected enterprise-level value.

COMMENT: Provide a description of each of the enterprise-level premiums and/or discounts and the procedures used to determine the amount of each premium/discount and your rationale for why each is applicable. Please note that this comment will not print.

Amount of Percentage Premium/Discount Carrying Balance

Selected Enterprise-Level Equity Value $27,720,000

Less: Key Man Discount 14.00% $3,880,800 $23,839,200 Adjusted Enterprise Equity Value $23,839,200

We have selected the following conclusion of enterprise-level equity value:

Enterprise-Level Equity Value (Rounded) $23,840,000



Appendix — Assumptions and Limiting Conditions This valuation is subject to the following assumptions and limiting conditions:

1. Public, industry, statistical, and other information furnished by others, upon which all or portions of this analysis is based, is believed to be reliable. However, we make no representation as to the accuracy or completeness of such information and have performed no procedures to corroborate the information.

2. The Company and its representatives warranted to us that the information they supplied was complete

and accurate to the best of their knowledge and that the financial statement information reflects the Company's results of operations and financial and business condition in accordance with generally accepted accounting principles, unless otherwise noted. The financial statements and other related information supplied by management has been accepted as correct without further verification. We have not audited, reviewed, or compiled the financial information provided to us and, accordingly, we express no audit opinion or any other form of assurance on this information.

3. This report and conclusion of value is restricted to the internal use of the management of the Company

for the sole and specific purpose as noted herein, and shall not be used to obtain credit or for any other purpose or by any other party for any purpose. Neither our work product nor any portions thereof, including any conclusions or the identity of our firm, any individuals signing or associated with this report, or the professional associations or organizations with which they are affiliated, shall be disseminated to third parties other than the Company, its financial accounting firm and attorneys, and governmental agencies by any means without our prior written consent and approval.

4. We or any individual associated with this assignment are not required to provide future services

regarding the subject matter of this report, including but not limited to providing further consultation, providing testimony, or appearing in court or other legal proceedings unless specific arrangements have been made.

5. The conclusion of value is valid only for the stated purpose as of the valuation date indicated. We take no

responsibility for changes in market conditions and assume no obligation to revise our conclusion of value to reflect events or conditions which occur subsequent to the valuation date.

6. Full compliance by the Company with all applicable federal, state, and local zoning and use, occupancy,

environmental, and similar laws and regulations is assumed, unless otherwise stated. Furthermore, no effort has been made to determine the possible effect, if any, on the Company due to future Federal, state, or local legislation including any environmental or ecological matters or interpretations thereof, unless otherwise stated.

7. This report and the conclusion of value arrived at herein are not intended by the author and should not

be construed by the reader to be investment advice in any manner whatsoever. The conclusion of value represents the considered opinion of Sample Valuation Services, LLC based on information furnished to them by the Company and other sources.

8. We do not provide assurance on the achievability of the results forecasted by the Company because

events and circumstances frequently do not occur as expected; differences between actual and expected results may be material; and achievement of the forecasted results is dependent on actions, plans, and



assumptions of management.

9. For the prospective financial information approved by management that was used in our engagement, we have not examined or compiled the prospective financial information and therefore, do not express an audit opinion or any other form of assurance on the prospective financial information or the related assumptions. Events and circumstances frequently do not occur as expected and there will usually be differences between prospective financial information and actual results, and those differences may be material.

10. We are not environmental consultants or auditors, and we take no responsibility for any actual or

potential environmental liabilities. Any person entitled to rely on this report, wishing to know whether such liabilities exist, or the scope and their effect on the value of the property, is encouraged to obtain a professional environmental assessment. We do not conduct or provide environmental assessments and have not performed one for the subject property.

11. We have not determined independently whether the Company is subject to any present or future liability

relating to environmental matters, including but not limited to CERCLA/Superfund liability, nor the scope of any such liabilities. Our valuation takes no such liabilities into account, except as they have been reported to us by the Company or by an environmental consultant working for the Company, and then only to the extent that the liability was reported to us in an actual or estimated dollar amount. Such matters, if any, are noted in the report. To the extent such information has been reported to us, we relied on it without verification and offer no warranty or representation as to its accuracy or completeness.

12. Except as noted, we have relied on the representations of the owners, management, and other third

parties concerning the value and useful condition of all equipment, real estate, and any other assets or liabilities, except as specifically stated to the contrary in this report. We have not attempted to confirm whether all assets of the business are free and clear of liens and encumbrances or that the Company has good title to all assets.

13. Neither all nor any part of the contents of this report (including the conclusion of value, the identity of

any valuation specialist(s), the firm with which such valuation specialists are connected, or any reference to any of their professional designations) should be disseminated to the public through advertising media, public relations, news media, sales media, mail, direct transmittal, or any other means of communication without our prior written consent and approval.

14. We have not made a specific compliance survey or analysis of the subject property to determine whether

it is subject to, or in compliance with, the American Disabilities Act of 1990, and this valuation does not consider the effect, if any, of noncompliance.

15. No change of any item in this valuation report shall be made by anyone other than , and we shall have no

responsibility for any such unauthorized change.

16. We have conducted interviews with the current management of the Company concerning the past, present, and future operating results of the Company.

17. This conclusion of value assumes that the Company will continue to operate as a going concern, and that

the character and integrity of the Company through any sale, reorganization, exchange, or diminution of the owners' participation would not be materially or significantly changed. It also assumes that the



current level of management expertise and effectiveness would continue to be maintained.

COMMENT: Modify the above list as necessary to reflect the actual assumptions and limiting conditions relevant to the specific valuation engagement. Please note that these comments will not print.



Appendix — Representations The following factors guided our work during this engagement:

The analyses, opinions, and conclusions of value included in this report are subject to the assumptions and limiting conditions specified previously in this report, and they are our personal analyses, opinions, and conclusion of value.

The economic and industry data included in this report were obtained from sources that we believed to

be reliable. We have not performed any corroborating procedures to substantiate that data.

This engagement was performed in accordance with the American Institute of Certified Public Accountants Statement on Standards for Valuation Services.

We have previously identified the parties for whom this information and report have been prepared.

This valuation report is not intended to be, and should not be, used by anyone other than those parties.

Our compensation for this engagement is not contingent on the outcome of this valuation.

[If a third party specialist was used during the engagement, identify the specialist here and include a statement to identify the level of responsibility, if any, you are assuming for the specialist's work. For example, “In connection with the excess earnings method, ABC Equipment Appraisers (ABC) was used estimate the fair market value of the Company's equipment. Although ABC's employees are licensed equipment appraisers, we assume no responsibility for their work.]

We have no obligation to update this report or our conclusion for information that comes to our

attention after the report date. ______________________________________ ___________________

(Signature) (Date) _______________________________________ ____________________ (Signature) (Date)

Comment: Modify or add to the above list as considered necessary. Note that if no third party specialists were used, the next to last statement should be deleted. The valuation analysts and any other person(s) taking responsibility for this valuation should sign and date the representation page. Please note that this comment will not print.



Appendix — Qualifications This report was prepared by Michael Jones Managing Director of Sample Valuation Services, LLC. Michael Jones holds the following professional designations and certifications: CPA, ABV, CVA, ASA.

Comment: Use this appendix to provide a detailed description of the qualifications of the appraiser/valuation analyst. This section can include of resume of professional certifications and experience, description of prior valuation engagements completed, etc. Please note that this comment will not print.

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